By Francis Akinnodi,
& Jimoh Ahmed
Economic experts have urged the Federal government to diversify her economic base, create an enabling environment for export oriented manufacturers to grow, instead of deliberate devaluation of the Naira.
They declared that devaluation in an import oriented economy like Nigeria could be catastrophic if not adequately taken care of.
The experts called for trade restrictions, ban on some selected imports, while other monetary measures should be introduced to address the country’s balance of payment.
The experts advised government to do all things possible to attract foreign investors to the country through the provision of necessary infrastructures and policies.
A professor of Economics at the Ekiti State University, Timothy Awe said government should provide stimulus to SMEs, such as grants and subventions, to mitigate the consequences in the near run.
According to Awe, “Increased export competitiveness, lower exchange rates would potentially render Nigerian goods and services more affordable to international consumers. This can improve exports by making items inexpensive to overseas purchasers, resulting in greater demand and possible economic development.
“An increase in foreign investment is likely to increase as a result of the depreciation of assets and investments. Because the Naira is weaker, foreign investors would be able to purchase assets and make investments at a reduced cost, thus encouraging foreign direct investment (FDI) inflows, which implies more foreign earnings.
“Nigeria is a big oil exporter, and a devalued Naira can enhance income from oil exports. Because oil is priced in US dollars, a weaker Naira implies the Nigerian government gets more Naira per dollar from oil sales, possibly increasing government revenue.
Prof. Awe said as the Naira’s value decreases, the cost of imported goods and raw materials rises, potentially leading to higher consumer prices.
Dr Chris Ofonyelu from the Department of Economics, Adekunle Ajasin University, Akungba-Akoko said that the devaluation was done to minimize the leakages and fraud in the multiple exchange rate, not really to increase income.
The don added that after some time, if naira stabilises and begins to appreciate, every person hoarding dollar will bring it out, stating that the short term effect is what Nigerians are facing currently.
A financial expert, Mallam Aminullah Kareem, suggested that, President Tinubu and his team must, as a matter of urgency take drastic measures to address the situation.
Mallam Aminullah stated that devaluation in an import oriented economy like Nigeria could be catastrophic if not adequately taken care of.